Agricultural income: mechanised processing integral to cultivation can qualify as exempt agricultural activity under the statutory test.

Profits from cultivating aloe (sisal) and processing it by machinery are treated as agricultural income where the statutory test focuses on processes "ordinarily employed by a cultivator" to render produce marketable; because there was no established cultivation, market, or distinct manual process for aloe leaf treatment prior to mechanisation, the taxpayer's mechanised preparation is considered the ordinary process in current economic conditions and thus integral to agriculture. Operative effect: the entire profits from cultivation and fibre manufacture are exempt from income tax in favour of the assessee.

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Issues: Whether profits derived from cultivation of aloe (sisal) and the preparation of sisal fibre by machinery constitute taxable income as a manufacturing process or are exempt as agricultural income under the Indian Income-tax Act.

Analysis: The statutory definition of agricultural income includes processes ordinarily employed by a cultivator to render produce fit for market. Comparison must be made with processes "ordinarily employed by a cultivator" for the plant in question. Evidence shows that prior to mechanised manufacture there was no established cultivation or market for aloe leaves in India apart from isolated, uneconomic manual treatment and jail labour; thus no independent ordinary cultivator's process exists distinct from the assessee's mechanised process. The absence of a real market for aloe leaves and the lack of an established, distinct agricultural practice for producing fibre means the process used by the assessee is the process "ordinarily employed" by cultivators of the plant in the present economic conditions.

Conclusion: The entire profits from cultivation of the aloe plant and the manufacture of sisal fibre by the assessee are agricultural income and are exempt from income tax; decision is in favour of the assessee.

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